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Men in Suits

COP27: Progress in Financing Climate Damage Repair, Frustration in Combating Climate Change

Updated: Dec 21, 2022

A final agreement was reached at the COP27 climate conference, including a landmark agreement to fund poorer countries' response to climate change-related loss and damage, but little progress on key climate mitigation areas, such as increased national emissions ambitions or commitments to transition from fossil fuels to cleaner energy.

The "Loss and Harm" agreement, in which wealthier nations committed to establishing a fund to pay for climate-change-related damage in poorer, more vulnerable countries, was the clear highlight of the conference's conclusion. The deal is the first time the subject has been officially adopted despite protests from wealthier nations. Under the terms of the agreement, a new dedicated fund will be established to assist developing countries in responding to loss and damage, and a "transitional committee" will make recommendations on how to operationalize countries' funding arrangements and the fund itself at the COP28 the following year.

An additional agreement was reached to operationalize the "Santiago Network for Loss and Damage," which provides technical help to developing nations that are more susceptible to the negative consequences of climate change.

Ursula von der Leyen, president of the EU Commission, commented on the loss and damage achievements at the meeting.

"I am glad that COP27 has opened a new chapter on financing loss and damage and established the groundwork for a new manner of solidarity between those in need and those who can assist. We are restoring faith. This is vital moving ahead because without climate justice there can be no lasting action against climate change."

Significant progress on compensating climate-related damages seems to have come at the expense of progress on climate reduction obligations, disappointing the attempts of certain governments to include more aggressive wording in the final accord. The United Kingdom, for instance, had hoped to formalise a commitment to peak global emissions by 2025, and the European Union had been urging big economies to quickly increase their Nationally Determined Contributions (NDCs).

However, the final agreement was not more ambitious than last year's COP26 text, as the 2025 peak emissions target was eliminated at the last minute, and the 1.5°C temperature increase target was just reaffirmed.

According to COP26 President Alok Sharma, it was difficult to even maintain the progress made in the previous year. Sharma, noting the "unprecedented" loss and damage agreement, stated:

Indeed, those of us who came to Egypt to preserve 1.5 degrees Celsius and to uphold what we all agreed to in Glasgow have had to work relentlessly to maintain the status quo.

The final accord simply called for a "increase in low-emission" energy and renewables, leaving the door open for ongoing fossil fuel use in conjunction with carbon capture programmes.

Sharma added:

"An emissions peak before 2025 is required, according to scientific evidence. In this text, no. Clear implementation of the coal phase-out. In this text, no. A vow to eliminate all fossil fuels. In this text, no. And the energy text, in the final minutes, waned."

Beyond the final negotiations, COP27 made progress on a number of significant business and finance-related initiatives, including the release of a new set of proposals to set clearer standards for the net zero pledges announced by businesses and other non-state entities, and the establishment of a $20 billion public/privately-financed Just Energy Transition Partnership.

Despite the conference's accomplishments, numerous leaders were dissatisfied with the general lack of progress.

In his concluding remarks at COP27, EU Commission Vice President Frans Timmermans stated that the final accord is "not enough of a step forward for people and planet," adding:

"It does not generate sufficient additional efforts from large emitters to increase and expedite their emission reductions. It does not increase confidence in our ability to meet the obligations set under the Paris Agreement and in Glasgow the previous year.

It does not address the gap between climate science and climate policy.

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